Goods can be produced and can be stored for the longer period of time. Whereas services are created as per the customer needs and it cannot be stored. Although many services industry is storing their services such as a hospital, hotel and so on. In hospital medicine and other medical equipment are stored in a way to provide the services to the patient. But the cost of inventory management is less than the cost of inventory management of the physical goods (Tomczak et al., 2018).
Services cannot be weighed or measured whereas good is a tangible output of a process that has physical dimensions. Involvement of customer in regards to services is more than the involvement of customer in regards to goods (Rispoli et al., 2017).
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Value of the services to the Australian and the whole economy.
According to the ABS (Australian Bureau of Statistics) identified that the growth of Australian economy is due to the increase in the service sector. Services sector contribute a lot to the global economy as it uses to generate maximum employment opportunity. From ABS (Australian Bureau of Statistics) report it was found that services sector has resulted to increase the GDP level of the Australian Economy (Francois et al., 2015).
A standard of living of the people increases by the three times when compared with the 1980s. Which is clearly indicating that manufacturing sectors are been replaced by the services sector industries.
So from the above diagram, it can be concluded that in the overall growth of the economy (GDP) maximum contribution is made by the services sector. Service sector industries contributed 76 percent of the growth in GDP. Which clearly indicates that value of service sector in developing the whole economy is important. As it contributed a maximum number of the employment and also raises the standard of living.
Values of the service sector to the Australian and economy in nutshell are
• Services sector industries yield more employment in the economy which results in increasing the personal disposable income of the people. Resulting in more saving with banks or spending in other investment which ultimately put a positive impact on the whole economic development.
• Services sector industries contribute maximum in GDP growth.
• Services sector industries dominate the workforce and also provide the above-average earnings as compared to manufacturing or goods based industries.
• A more new job opportunity has been created by the services sector industries in Australia. It can be shown by the below diagram.
Growth factors for services sector industries in Australia
So through the deregulation, many developed countries try to set up their service plant in developing countries as the cost of labor and materials are cheap. Which motivated the services sector industries to step into the services sector. As a result, deregulation put a positive impact on the service sector growth (Cloke et al., 2017).
• Hollowing out effect
Due to the technological and economic reform many developing and developed countries planned to switch to services sector industries. As hollowing out effect enable the organization and countries to provide the best services to the customer at low and reasonable rate. Through hollowing out effects it is possible to supply services in least and reasonable cost. Hollowing effect affected the manufacturing plant to shift in the developing countries due to cheap labor. Which gave rise to services sector in Australia and other developed nation.
Factors impacting the growth of service sector over coming next 5 years.
Due to increase in the employment level and increase in the total GDP growth, it will lead to increase the standard of living which will lead the people to demand more for services as a final result the demand for services increases.
Advancement in the technology also impacts the growth of the service sector as it led to having more competition. Beside these industrial reforms also impact the service sector growth as industrial reform includes the reduction of the protection provided to the small scale services industry. Increase in the per capita income due to increase in employment will also impact the growth of the service sector industries.
Increase in employment level
Change in demand and productivity- for service industry it is important to determine the how much demand has changed over a period of time.
Increasing the level of living standards
Economic reforms- as it impacts the growth of the services sector because the economic reform some time reduces the protection of the small-scale services industry.
[Accessed 27 Mar. 2018].
Nber.org. (2017). How Deregulation Spurs Growth. [Online] Available at http://www.nber.org/digest/sep03/w9560.html
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